As a reminder, November15th last year was actually a very rocky period. President Obama had just been re-elected, and the markets did not take the news very well. On Election Day last year, the SPY was $142.96. By November 15th, it had dropped to $135.70. Interestingly, that 135.70 is the absolute bottom the market has been in the past 12 months. In fact, the last time the SPY closed lower than that was July 25th, 2012 at 133.96. As a reminder, we are at $177.29 right now. It has pretty much been up, up, up. So November 15th last year was a great time to start any sort of portfolio in hindsight. But back then, we were worried about the fiscal cliff.
So when I picked my stocks, I was intentionally picking what I thought were defensive names.
AAPL was my first pick. It was trading at $537.62 and had recently released the iPhone 5. While that was a big success, Apple was in the midst of changing from a growth stock to a value stock. It had already fallen from $700+ to my $537 from early September to mid November. After I bought it, it dropped below $400 (I show around $388 in June of 2013). One issue was the uncertainty regarding smartphone competition and whether AAPL had lost their mojo and would margins begin to contract. I think the success (thus far) of the iPhone 5s (no, the S does not stand for same) and the recently released iPad Air shows that their is still strong demand for AAPL products and they are viewed as "superior". With my dividends, I have essentially had a round trip and am down about 1% right now.ABC was my second pick. These guys act as a middle man between pharmaceuticals and the drug store chains. Seems pretty defensive, right? ABC essentially has done everything right. They grew revenues by 28% looking at quarter ending September 2013 vs 2012. They inked a relationship with Walgreens. So they are up an impressive 70%. They are certainly in the right space, their biggest competitor is CAH, which is also up a strong 50%.
LPS - is a company that provides mortgage services. I liked this space as I felt housing was on the rebound. I also felt that low interest rates would drive a lot of business. This was a stock it would have been easy to say I missed the boat. LPS was trading around $15 earlier in 2012 and I bought a shade under $24. They did have an overhang of some lawsuits regarding mishandling of mortgages during the financial crisis, but they settled those near the expected amount. In fact, if there is one thing I have noted in my investing days that the fear of adverse penalties and lawsuits is virtually always greater than the reality. LPS ended up accepting a buyout from FNS. I will be selling my LPS prior to that transaction occurring,but FNS is now actually on my watch list. It is an interesting company,though I wish they would spin off some of their restaurant holdings and focus just on financials. I am up 44% on LPS.
) them early in the fall. Again, I felt that a content-oriented company was relatively defensive. They had a dividend and a stock buyback that put a bit of a floor under the stock. Like ABC, they are up almost 70%. I think one thing that has helped is that everyone wants content, iTunes, Amazon, Netflix etc. Who doesn't want to watch Spongebob Squarepants? Looking at their chart, you could have bought VIA for under $20 in the crash of 2008-09. Let me tell you, there were some tremendous bargains (Once in a generation?) in that time period.
WU was the final pick. Western Union had just come of a disastrous 3rd quarter that saw their stock price drop from over $18 to under $12. This was a classic example of the market going nuts! Western Union is a company with a long, long history and is certainly still extremely relevant in the exchange of funds. Go into many groceries stores and you will see the WU emblem. And while internet companies may nibble at WU somewhat, their are many emigrants that still find WU the best way to get funds to their families. This was actually (now that I look back at it) a classic Seth Klarman Margin of Safety play. And I am up a nice 38% (gave back some a couple of weeks ago when they were north of $19 and had disappointing earnings).
Anyway, I guess it will be a wrap on these five guys this week. Still thinking about the replacements.
| 11/15/12 Stocks | Start | Current | Dividend | Pct Gain | R3K Gain |
| $537.62 | $520.56 | $8.75 | -1.5% | 34.8% | |
| $40.21 | $68.00 | $0.63 | 70.7% | 34.8% | |
| LPS | $23.89 | $34.08 | $0.40 | 44.3% | 34.8% |
| VIAB | $49.12 | $82.29 | $1.15 | 69.9% | 34.8% |
| WU | $12.77 | $17.21 | $0.50 | 38.7% | 34.8% |
| Totals | 44.4% | 34.8% |
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